Short answer: when a large sum lands — a practice-sale payout, an inheritance, a big bonus — the best first move is to slow down. Park it somewhere safe, cover taxes and an emergency reserve, knock out high-interest debt, then invest the rest according to a plan. The biggest windfall mistakes come from acting fast, not from waiting a few weeks to think.
Why not invest it right away?
Because a windfall triggers pressure — from salespeople, from relatives, from your own excitement — and pressure produces bad decisions. Parking the money in a high-yield savings account for a few weeks costs you almost nothing and buys you the clarity to make good choices. There’s no prize for rushing.
The order of operations
- Park it safely — a high-yield savings or money market account while you plan.
- Reserve the taxes — especially after a practice sale, a large bill may be due; don’t spend what you’ll owe.
- Top up your emergency fund so you’re not forced to sell investments later.
- Pay off high-interest debt — a guaranteed, risk-free return.
- Invest the rest to a diversified plan, aligned with your goals.
How should you invest the remainder?
To a diversified, low-cost plan matched to your time horizon — not into a single concentrated bet. If putting a large sum in all at once feels daunting, easing in with a defined schedule is a reasonable compromise (lump sum vs. dollar-cost averaging). For proceeds meant to fund retirement, this is where a windfall becomes a durable income stream.
What if the windfall is your retirement?
For many dentists, the practice sale is a major piece of the retirement plan. That raises the stakes: the money now has to last decades, so the focus shifts from growth alone to a durable withdrawal and income strategy. Turning a lump sum into lasting income is its own discipline — and a good reason to plan the sale and the investing together, well before the check arrives.
Frequently asked questions
Slow down and plan. Park it in a safe, liquid account; set aside the taxes you’ll owe; top up your emergency reserve; pay off high-interest debt; then invest the remainder in a diversified plan aligned with your goals. Avoid rushing into concentrated “opportunities,” and coordinate with the tax picture of the sale.
Clear high-interest debt first — it’s a guaranteed return. Low-interest debt is more of a judgment call you can weigh against investing. Either way, reserve taxes and an emergency fund before committing the rest to investments.
Sources
Founder & Financial Planner · Investment Adviser Representative · Series 63 & 65
Ian McGinnis is the founder of Dental Wealth Partners and a fee-only financial planner dedicated to dentists. As an investment adviser representative (Series 63 and 65), he built the firm to give dentists coordinated, fiduciary advice across their practice, taxes, investments, retirement plans, and long-term goals — the whole picture in one strategy. A graduate of Belhaven University, Ian previously worked at Davis Private Wealth, MML Investors Services, and Northwestern Mutual, and is based in the Jackson, Mississippi area. He is the author of The Wealthy Dentist and hosts the Smiles & Cents podcast.
Keep reading
- Dollar-cost averaging vs. lump sum: how should a dentist invest a large amount?Investing a lump sum all at once usually beats spreading it out — but dollar-cost averaging can be the smarter behavioral choice. How dentists should decide.
- How is the sale of a dental practice taxed?A practice sale is taxed as a mix of capital gains and ordinary income, driven by how the price is allocated across assets. What dentists should plan for.
- Building your retirement paycheck: turning savings into incomeRetirement flips the problem from saving to spending. How dentists can turn a portfolio and practice-sale proceeds into a reliable, tax-smart paycheck.